Shake Shack hits San Diego: Fine dining and the crowded burger market

Shake Shack held a VIP soft opening Thursday at its first San Diego location, at Westfield UTC mall. Served up were Smoke Shack burgers, cheese fries and shakes made with custard. (JOHN GASTALDO)

Shake Shack held a VIP soft opening Thursday at its first San Diego location, at Westfield UTC mall. Served up were Smoke Shack burgers, cheese fries and shakes made with custard. (JOHN GASTALDO)

jsteele

If you eat one cheeseburger a week, Shake Shack executives want it to be theirs - and the company is gambling that San Diego will embrace its fine-dining version in an increasingly crowded burger market.

The first Shake Shack in San Diego opens Friday at Westfield UTC mall in University City.

Founded in New York by celebrity restaurateur Danny Meyer, the company serves up "roadside stand" burgers, hot dogs, fries and shakes with modern-day flair.

Doesn't that sound like a handful of other places in San Diego - including The Habit, Smashburger, Five Guys and even the Southern California cultural phenomenon In-N-Out?

Shake Shack uses premium ingredients that would make a foodie swoon, such as all-natural Angus beef and Niman Ranch bacon.

But doesn't that sound like Burger Lounge, the
La Jolla
-based chain that advertises grass-fed beef and organic cheese?

People line up for the VIP soft opening of Shake Shack at UTC Westfield. (JOHN GASTALDO)

People line up for the VIP soft opening of Shake Shack at UTC Westfield. (JOHN GASTALDO)

Perhaps.

In the gourmet burger business, the street corners are already pretty full.

"Southern California will probably be a little more difficult, because of the presence of In-N-Out," said John Gordon, a San Diego-based restaurant industry analyst and founder of Pacific Management Consulting Group.

He also mentioned Jack In The Box, a San Diego-based fast food empire that has ventured into fancier fare, such as brisket burgers.

Additionally, Shake Shack's prices are near the higher end of burger joints. Its ShackBurger goes for $5.55, and a classic shake is $5.29.

Gordon said the average Shake Shack bill is $15 a person.

"In the United States, 80 percent of the restaurant transactions take place at $10 or less," Gordon said.

"So Shake Shack is going to have to fight among that 20 percent."

But here's where the Shake Shack story may help it.

The company was born from a New York City hotdog stand, a do-gooder project from Meyer to help conserve Madison Square Park in 2001.

New Yorkers liked the fancy food in an unpretentious outdoor "shack," and the concept exploded.

Thanks to a 2015 initial public offering, the company has expanded, including using licensing to go international.

In fiscal year 2016, it opened 30 new locations, including 10 internationally. Net income in 2016 was $12.4 million.

But the company stuck to its high-end ingredients and good-hearted roots: Stores partner with local food suppliers.

At UTC, the ice cream desserts include toppings made by two San Diego companies, Elizabethan Desserts and Betty's Pie Whole. From those dishes, 5 percent of sales will be donated to environmental nonprofit group I Love a Clean San Diego.

The store also serves at least four San Diego County craft beers, in addition to its own pale ale, Brooklyn Shackmeister Ale, by Brooklyn Brewery.

"When you start going down that route, I think you are creating something a little different, a more premium experience," Chief Operating Officer Zach Koff said during an interview with the San Diego Union-Tribune.

"If you look at a menu, yes, you'll see burgers, fries and shakes, for sure. I think that's pretty much where (the similarity) stops."

There are plans for additional locations in San Diego, but Koff is being coy about how many.

A Mission Valley store looks like a certainty.

How many more after that is less firm - leaving it an open question if Shake Shack will situate itself as a couple of destination spots regionally or sprinkle locations around the county.

"We've got a few on the books that aren't official deals yet that we should see in the next couple years," Koff said, referring to San Diego County, which he said the company has been eyeing for several years.

The company opened five Los Angeles-area stores when it expanded into that market.

Gordon thinks the San Diego region can only support two or three.

The location in the newly renovated UTC is an homage to both San Diego style and Shake Shack's lower-Manhattan roots.

Tables are made from reclaimed American bowling alley lanes by a New York craft company. The container-box metal over the cash registers is a wink to the original metal shack in Madison Square Park.

But the light, airy space with blond-wood tables and pale paneling is all Southern California.

"We try to be a reflection of the community. That can go as micro as a neighborhood or as big as a city," Koff said.

Koff said they know that San Diego's vibe leans toward healthy and fit.

The one vegetarian burger on the menu - the 'Shroom Burger - is two portobello mushroom caps sandwiching two kinds of cheese, all of which gets breaded and fried.

It's pretty decadent, he acknowledges, But, in general, Koff argues that Shake Shack's version of decadence should be at home in San Diego's ZIP codes.

"A lot of people are super conscious about what they are consuming. And we always have been, too," the chief operating officer said.

"What we say is, You will crave a cheeseburger. And when you do, this is the one you should feel best about eating."